Finding the right gifts for family and friends is the real nightmare before Christmas, so why not make life simpler and give them the money instead.

Cold hard cash has so many advantages: you don't have to trek across town to find it - you can pick some up from the nearest ATM, one size fits all and you don't have to worry if the recipient has already got some, and if, for some reason, he or she is disappointed with such a versatile prezzie, any shop will gladly exchange it for goods of similar value.

There's just one problem: that niggling voice in your head that keeps telling you it's a bit of a cop-out. Cash gifts at Christmas have an image problem. Handing somebody a few grubby notes doesn't exactly conjure up the spirit of the season, nor does it make you look like you've put a lot of thought into your gift.

"Unless a family member or very dear friend is in dire need, giving cash as a Christmas present is shoddy," says Liz Brewer, social etiquette expert on the ITV show Ladette to Lady. For Brewer, giving cash is an absolute no-no. "It shows laziness and lack of thought, and therefore isn't a good idea," she says. Oh dear.

If you simply must give cash there are ways of dressing it up as something more thoughtful. "You could use subtle camouflage, for example tuck it inside a good book, wallet or handbag," suggests Brewer. "This would show you had made an effort. The same would apply if giving a voucher."

A preferable present

Gift vouchers: dress up that cash. Photograph: Martin Godwin
Yet rather than being offended it seems some people would be grateful to receive money. Two out of five of us would rather receive cash or a voucher than a present chosen by someone else, according to new (and perhaps not entirely objective) research by the
VA, the trade association representing the gift voucher industry.

For children, there is another good reason to give money, particularly if they have their own bank account or are saving towards something, says Neil Thomas, director of independent financial adviser Simpsons of Brighton.

"One of the best gifts you can give a child is to teach them the value of saving. That lesson will stand them in good stead," he believes.

Writing a cheque is marginally more personal than transferring the money online, and also safer, says Thomas. "If you pay money directly into somebody's account, they might not notice. One of my clients was upset that his niece hadn't acknowledged a generous gift of £100.

"When he finally broached the subject, it turned out he had transferred the money to a bank account she no longer used."

Another danger is that if the recipient is overdrawn, all you are doing is gifting the money to their bank. If you give a cheque they can at least choose which account to pay it into.

Disguised with a card

Pre-paid cards are a cash alternative
You can't be Scrooge-like if you decide to give cash, because there is no disguising how much it cost you. The same is true of vouchers, but they are considered more acceptable gifts because they are likely to be used for something special rather than disappearing into the recipient's daily spend.

Mary Rendle, 37, a nurse from Shepherd's Bush, London, was delighted when her boss gave her John Lewis vouchers. "I bought something nice, but when I was really skint at the end of the month I used the rest to buy groceries at Waitrose. I felt a bit spoilt because I could treat myself to something nice to eat."

Another alternative would be to give a gift card, which is a credit card-sized piece of plastic with money already loaded onto it - like the gift cards you increasingly see in stores, but accepted in many more places. Barclays has recently launched such a card. You can load between £10 and £300 on to it, it is valid for two years and can be used at any retailer which accepts Visa Electron. You pay £3 for the card, but it is free for the user.

They allow the recipient to shop online, as well as in store, and to withdraw money from cash machines. Extreme Cred boasts no monthly fees or usage charges, but don't be fooled - it costs £8.95 to buy the card, and there are fees of £1 for each ATM withdrawal and £3.99 to cancel the card and get a refund. The Ministry of Sound card costs even more - £9.99 upfront, then £1.50 for each ATM withdrawal. You'd get better value from simply handing over the notes.

Giving cash as a gift might sound like a cop-out, but that depends on the recipient. If they already have plenty in the bank, they won't be too excited at getting a little more of the folding stuff.But if they are short of money, or young enough to be impressed by, say, £20, they might be very grateful.

And if you are in two minds about giving cash, ask yourself this question: would you rather receive more socks, scented candles and bath salts, or have the cash? I know which I would choose ...